Non-tariff barriers in
CEFTA: Analysis of
Technical and
Administrative Barriers to
Trade
Roundtable on Non-Tariff Barriers in the CEFTA area
Budapest, 8 October 2009
Background: classification of non-tariff barriers
Analysis of trade flows among CEFTA Parties and between CEFTA Parties and main trade partners
Identification of potential value chains
Preliminary conclusions
Content of the presentation
• There is no consensus on the classification of NTBs
• No list can be fully exhaustive
• Most widely accepted classification - Multi-Agency Support Team (MAST) classification (UNCTAD, OECD, World Bank, WTO, ITC, FAO, IMF):
oSPS; TBTs; Other technical measures; Price control measures; Quantity control measures; Para-tariff measures; Finance measures; Anti-competitive measures; Export related measures; Trade-related investment measures; Distribution restrictions; Restrictions on post-sales services; Subsidies; Government procurement restrictions; Intellectual property; Rules of origin
NTBs are difficult to identify and their effects on trade
flows cannot be easily quantified
OECD analysis focuses on TBTs, SPS and
administrative barriers to trade
1. Technical barriers to trade
• Institutional and legislative framework for adoption of technical standards and implementation of European and international standards
• State of certification arrangements (institutional framework for certification, number of laboratories, inspection bodies and conformity assessment bodies, presence of MRAs, number of companies certified)
2. Sanitary and phytosanitary measures
• Institutional and legislative framework and adoption of European and international SPS measures
3. Administrative barriers to trade
• Presence of licenses
• Accessibility of customs laws and regulations
Focus on NTBs that lie within the mandate of the TBTs and NTBs sub-committee, as well as other CEFTA structures, and validated through IRI research
Validated through results of questionnaires distributed to Hungarian institutions in the region
Did the situation change since the first comprehensive
review in 2004?
Ranking (by importance of
barrier)*EU Market
South-eastern European market
1Technical standards and
certificationCustoms Procedures
2Quality control and consumer
protectionBureaucratic registration
3 Customs barriersTechnical standards and
certification
4 ---Quality control and consumer
protection
Ranking of barriers faced by Western Balkans exporters, by market, 2004
Note: * In descending order by degree of importance. Items in the survey not related to TBTs, customs and
administrative procedures are omitted from this table (and indicated by ---)
Source : Adapted from OECD (2005), based on Western Balkans survey (2004)
• OECD studies show that among commodities trade in live animals and related products is mostly affected by NTBs (SPS and customs procedures)
• TBTs are most frequent in trade of machinery, electronics and pharmaceuticals
• All the above are important export items or potential sources of export diversification for CEFTA Parties
Analysis of trade flows could help identify what
product categories are most affected by NTBs
• As a general rule, standards, SPS measures and administrative procedures should generate trade by facilitating cross-border transactions
• If that is generally the case, when would standards and administrative procedures become a barrier to trade?
• Possible answer: discriminatory application and non-transparency of the measures
• Consistent and predictable application of uniform standards should facilitate the formation of value chains
• If this does not occur, the existence of NTBs could be one of the causes
• At the same time, a lack of competitiveness prevents countries from participating in sophisticated value chains
Do non-tariff measures represent an impediment to
trade at all?
Large current account deficits and low levels of
export propensity suggest the CEFTA Parties should
increase their trade performance
Source: EBRD Transition Report, World Bank Trade Indicators (2008)
Albania Bosnia and Herzegovina
Croatia FYR Macedonia
Rep. of Moldova
Montenegro Serbia
Current account/GDP (%), 2007
-9.1 -12.8 -7.5 -7.5 -15.2 -32.5 -13.7
Exports/GDP (%), 2007 28 39 48 55 46 51 29
• The main drivers of current account deficits in SEE economies are trade deficits
• Among “old” CEFTA countries, only Poland has an export propensity lower than 60%
A strong dependence on the European Union at the
regional level…
• CEFTA trade flows strongly oriented towards the EU - intra-regional trade plays a marginal role
• Intra-regional trade flows have increased, but only in the same proportion as total exports and imports
17%
24%
60%
Rest of the World
CEFTA
EU 27
Composition of Total Regional Goods Exports, 2006
Source: OECD analysis based on UN Comtrade database
… with some variations across the Parties
Source: OECD analysis based on UN Comtrade database
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Albania Bosnia Herzegovina
Croatia Rep. of Moldova Serbia
Export destinations of selected Parties, 2006
RoW EU-27 CEFTA
Trade liberalisation has not yet shown significant
changes in regional market shares
Source: OECD analysis based on UN Comtrade database
1%
16%
41%
0%
29%
13% Albania
Bosnia Herzegovina
Croatia
Moldova
Serbia and Montenegro
FYR Macedonia
Regional market shares, 2004
1%
18%
33%
2%0%
34%
12%Albania
Bosnia Herzegovina
Croatia
Montenegro
Rep. of Moldova
Serbia
TFYR of Macedonia
Regional market shares, 2007
• As the agreement is still in relatively early stages, one cannot rule that shifts in the weight of individual Parties will occur
• Some changes in the market shares could be observed as Parties move beyond tariff reductions and tackle other trade obstacles, both at the border and behind the border
What is the scope for sophisticated
manufactured goods?
• Most Parties specialise in low value added industrial suppliers and consumer goods (e.g. garments, shoes)
• Few specialise in sophisticated manufacture goods (including transport equipment and capital goods)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Transport equipment
Industrial supplies
Goods not elsewhere specified
Fuels and lubricants
Food and beverages
Consumption goods
Capital goods
Structure of merchandise export, 2007
Source: OECD analysis based on UN Comtrade database
Analysis focuses on main trading partners
Source: OECD analysis based on UN Comtrade database
90%
10%
Albania
CEFTA/main partners as % of total share EU27
Trade with remaining EU 27
88%
12%
BiH
86%
14%
Croatia
70%
30%
Republic of Moldova
75%
25%
FYROM
78%
22%
Serbia
Analysis of trade with main trading partners shows
low levels of technological intensity
Source: OECD analysis based on UN Comtrade
Exporting country Importing country ItemClassification according to technological intensity
Croatia ItalyShips, boats and floating structures
Medium-low-technology
TFYR of Macedonia GermanyArticles of apparel and clothing accessories
Low-technology
Croatia AustriaElectrical machinery and equipment
Medium-high-technology
Croatia Italy Mineral fuels and oils Medium-low-technology
Croatia ItalyArticles of apparel and clothing accessories
Low-technology
Albania Italy Footwear Low-technology
Croatia GermanyMachinery and mechanical appliances
Medium-high-technology
Croatia Italy Wood and articles of wood Low-technology
TFYR of Macedonia Italy Iron and steel Medium-low-technology
Serbia Italy Iron and steel Medium-low-technology
Structure of intra-regional trade has remained virtually unchanged since
2004, with commodities and low value-added products dominating
Source: OECD analysis based on UN Comtrade
Rank in 2007 Exporting Party Importing Party Commodity Rank in 2004Increase/decrease in ranking 2004-2007
1 Croatia Bosnia HerzegovinaMineral fuels, mineral oils and products of their distillation
1 0
2 Bosnia Herzegovina CroatiaAluminum and articles thereof
5 -3
3 TFYR of Macedonia SerbiaMineral fuels, mineral oils and products of their distillation
3 0
4 Bosnia Herzegovina SerbiaMineral fuels, mineral oils and products of their distillation
15 -11
5 Croatia SerbiaMineral fuels, mineral oils and products of their distillation
6 -1
6 TFYR of Macedonia Serbia Iron and steel 20 -14
7 Croatia Bosnia Herzegovina
Machinery and mechanical appliances; parts thereof
7 0
8 Serbia Bosnia Herzegovina Iron and steel 10 -2
9 Bosnia Herzegovina Serbia Iron and steel 69 -60
10 Bosnia Herzegovina CroatiaArticles of iron or steel
22 -12
AlbaniaBosnia
HerzegovinaCroatia
TFYR of Macedonia
Rep. of Moldova
Montenegro Serbia
Live Animals; Animal Products 0.86 0.68 1.03 0.56 0.38 0.54 0.90
Vegetable Products 1.25 0.45 0.59 1.89 6.08 0.86 3.08
Animal or Vegetable Fats and Oils Vegetable Waxes
0.05 1.65 0.74 0.60 9.23 0.03 3.30
Prepared Foodstuffs; Tobacco and Manufactured Tobacco Substitutes
0.82 1.21 2.42 3.20 7.23 2.09 2.98
Mineral Products 1.30 0.87 1.07 0.49 0.29 0.76 0.30
Products of The Chemical or Allied Industries 0.03 0.73 0.78 0.33 0.24 0.48 0.82
Plastics and Rubber; and Articles Thereof 0.18 0.50 0.97 0.32 0.58 0.06 2.06
Raw Hides and Skins, Leather, Furskins and Articles Thereof
2.62 2.88 2.01 0.56 3.54 0.88 0.75
Wood And Articles of Wood 1.29 8.75 4.97 0.36 0.40 2.59 2.32
Pulp of Wood or of Other Fibrous Cellulosic Material
1.20 1.21 1.24 0.25 0.59 0.39 1.54
Textiles And Textile Articles 6.25 1.17 1.21 5.26 4.66 0.14 1.40
Footwear, Headgear And Umbrellas, 25.50 8.28 2.45 4.08 4.54 0.30 3.36
Articles of Stone, Plaster, Cement, Asbestos, Mica or Similar Materials
0.92 1.11 2.47 1.90 3.32 0.15 1.71
Natural or Cultured Pearls, Precious or Semi-Precious Stones
0.14 0.01 0.23 0.20 0.01 0.02 0.07
Base Metals and Articles of Base Metal 2.24 3.14 1.00 4.66 0.88 7.93 3.03
Machinery and Electrical Equipment 0.14 0.45 0.70 0.11 0.40 0.12 0.50
Vehicles, Aircraft, Vessels and Associated Transport Equipment
0.03 0.29 1.42 0.22 0.09 0.07 0.41
Optical, Photographic, Cinematographic, Medical or Surgical Instruments
0.03 0.10 0.30 0.12 0.56 0.04 0.20
LegendNo comparative
Advantage
Comparative
Advantage
CEFTA Parties have overlapping revealed comparative advantages, in
product categories with low level of export sophistication
RCA’s Main Partners
Austria Bulgaria Germany Greece Hungary Italy Romania Slovenia
Live Animals; Animal Products 1.03 0.95 0.85 2.49 0.93 0.57 0.46 0.65
Vegetable Products 0.44 2.76 0.40 2.52 1.34 0.80 1.58 0.40
Animal or Vegetable Fats and Oils Vegetable Waxes
0.39 1.17 0.45 4.56 0.69 0.96 0.73 0.18
Prepared Foodstuffs; Tobacco and Manufactured Tobacco Substitutes
1.39 1.66 0.91 3.61 0.92 1.43 0.63 0.68
Mineral Products 0.26 1.26 0.20 0.95 0.23 0.35 0.68 0.24
Products of The Chemical or Allied Industries
0.80 0.79 1.32 1.17 0.63 0.85 0.49 1.47
Plastics and Rubber; and Articles Thereof 1.17 0.60 1.28 1.30 1.14 1.13 1.19 1.44
Raw Hides and Skins, Leather, Furskins and Articles Thereof
0.90 0.60 0.36 3.24 0.43 3.43 1.13 0.77
Wood And Articles of Wood 3.92 1.14 0.83 0.47 0.90 0.50 3.19 3.18
Pulp of Wood or of Other Fibrous Cellulosic Material
2.08 0.55 1.29 0.80 0.65 1.07 0.26 1.91
Textiles And Textile Articles 0.65 2.64 0.56 2.11 0.36 1.74 2.43 0.82
Footwear, Headgear And Umbrellas, 0.84 1.65 0.45 0.60 0.57 3.28 5.41 0.80
Articles of Stone, Plaster, Cement, Asbestos, Mica or Similar Materials
1.45 2.01 1.08 1.28 1.33 2.48 0.61 1.71
Natural or Cultured Pearls, Precious or Semi-Precious Stones
0.36 0.25 0.37 0.13 0.01 0.75 n/a 0.02
Base Metals and Articles of Base Metal 1.74 2.64 1.04 1.88 0.62 1.35 1.71 1.65
Machinery and Electrical Equipment 1.10 0.51 1.04 0.41 1.73 1.03 0.89 0.91
Vehicles, Aircraft, Vessels and Associated Transport Equipment
1.08 0.19 1.73 0.33 1.03 0.97 1.12 1.47
Optical, Photographic, Cinematographic, Medical or Surgical Instruments
0.72 0.40 1.22 0.30 0.77 0.71 0.28 0.65
LegendNo comparative
Advantage
Comparative
Advantage
Intra Industry Trade
IIT
Croatia-Italy
Croatia-CEFTA
Fuel wood, in logs, in billets, in twigs, in faggots or in similar forms
1.04 8.83
Wood charcoal (including shell or nut charcoal), whether or not agglomerate ...
1.01 10.21
Wood in the rough, whether or not stripped of bark or sapwood, or roughly s ...
0.52 98.38
Wood sawn or chipped lengthwise, sliced or peeled
6.38 31.99
Sheets for veneering 7.96 79.92
Wood (including strips and friezes for parquet flooring, not assembled)
31.39 25.55
Particle board and similar board 50.00 0.75
Plywood, veneered panels and similar laminated wood.
97.51 70.50
Builders' joinery and carpentry of wood
97.08 48.78
Other articles of wood. 55.32 89.66
LegendGreater
IIT
IIT
Croatia-Italy
Croatia-CEFTA
Men's or boys' suits, ensembles, jackets, blazers, trousers, bib and brace ...
69.64 84.89
Women's or girls' suits, ensembles, jackets, blazers, dresses, skirts
62.20 94.75
Men's or boys' underpants, briefs, nightshirts, pyjamas, bathrobes
59.55 53.65
Women's or girls' slips, petticoats, briefs, panties, nightdresses
62.59 63.88
T-shirts, singlets and other vests, knitted or crocheted.
69.83 83.93
Jerseys, pullovers, cardigans, waist-coats and similar articles, knitted or ...
40.33 86.89
Babies' garments and clothing accessories, knitted or crocheted.
36.98 3.66
Track suits, ski suits and swimwear, knitted or crocheted.
16.17 19.73
Panty hose, tights, stockings, socks and other hosiery
53.47 72.31
Other made up clothing accessories, knitted or crocheted
62.83 15.19
IIT
Albania -Italy
Albania -CEFTA
Waterproof footwear with outer soles and uppers of rubber or of plastics
0.55 2.06
Other footwear with outer soles and uppers of rubber or plastics.
43.49 68.07
Footwear with outer soles of rubber, plastics, leather or composition leath ...
6.66 84.20
Other footwear.1.80 1.92
Parts of footwear50.42 40.67
IIT
Serbia -Italy
Serbia -CEFTA
Ferrous waste and scrap; remelting scrap ingots of iron or steel.
13.32 0.71
Semi-finished products of iron or non-alloy steel.
10.17 97.16
Flat-rolled products of iron or non-alloy steel
1.88 47.80
Flat-rolled products of iron or non-alloy steel
10.02 53.12
Flat-rolled products of iron or non-alloy steel
14.67 23.35
Flat-rolled products of iron or non-alloy steel, of a width of less than 60 ...
19.06 19.39
Flat-rolled products of iron or non-alloy steel, of a width of less than 60 ...
7.97 3.98
Angles, shapes and sections of iron or non-alloy steel.
0.31 68.46
Wire of iron or non-alloy steel.8.86 54.57
LegendGreater
IIT
Intra Industry Trade
CEFTA could lead to an increase in both intra-
regional and intra-industry trade, but also result in
more NTBs
Source: OECD analysis based on UN Comtrade
• Increase in intra-regional trade as a consequence of the CEFTA Agreement could spur the production of value-added goods through the creation of vertically integrated value chains
• Increasing FDI inflows could also lead to rising intra-industry trade, as occurred in Central and Eastern Europe
• But if levels of intra-industry trade among CEFTA Parties do increase, TBTs will represent a more significant obstacle to trade in the region
Statistical analysis suggests that TBTs do not
seem to represent a significant barrier to trade
Source: OECD analysis based on UN Comtrade
• However, there are some product categories among those that are currently traded that display a medium level of sophistication (e.g. machinery, electrical equipment)
• CEFTA Parties could prioritise elimination of NTBs in those product areas, as it would allow them to increase their participation in more sophisticated value chains
Trade policy should be complemented by clear
competitiveness policies
Source: OECD analysis based on UN Comtrade
• CEFTA alone does not represent the solution for maximising the trade potential of the region
• Main objective of competitiveness policies: increase productivity across all sectors of the economy
• SMEs’ participation in networks within regional and global value chains should be promoted
• Elimination of NTBs, coupled with policies to promote SME competitiveness, could help promote these value chains
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